Debt crisis undermines industrial relations: EU report

(BRUSSELS) - The debt crisis is a serious challenge to Europe's 'social model' of a fair share for all, driving tensions to worrying levels as unpopular austerity measures bite deeper, the European Commission said Thursday.

A Commission report on industrial relations last year painted "a worrying picture," EU Employment and Social Affairs Commissioner Laszlo Andor said, warning of the need to get back on track.

Stinging austerity policies and painful economic reforms to stabilise public finances call for dialogue between workers, employers and governments to be successful, Andor told a press conference to launch the report.

But "social dialogue is under increasing pressure in the current context of depressed macroeconomic demand, tax increases and government spending cuts," Andor said.

"We need to reinforce the role of social partners at all levels if we are to come out of this crisis and preserve the benefits of the European social model," he said, using a phrase long-associated with a consensus approach, in contrast to US-style free-market capitalism.

Andor was asked if the report showed there were differences over the austerity measures championed by EU Economic Affairs Commissioner Olli Rehn but he said this was not the case.

"We speak with one voice," looking to find the right mix of measures to cope with the crisis, Andor said, arguing that the proper balance had to be found and that this was a position he shared with Rehn.

With the debt crisis dragging on for a third year and the European economy struggling badly, there have been increasing calls for governments to go for growth and jobs rather than austerity so as to ease social tensions.

There have been widespread protests, sometimes violent, against the cutbacks but so far EU leaders have largely stuck to austerity, fearing that if they did not, the financial markets could turn against them.